Sears Card to be Used in Other Stores

Sears, Roebuck & Co is signing up retail partners to accept its private label credit card. Sears has the largest private label portfolio in the U.S., with 38 million accounts and $22 billion in receivables. In addition, with just two years experience on its Sears MasterCard product, the company has become the 13th largest bank card issuer in the U.S., with more than $5billion in receivables. It will also soon be launching a Lands End MasterCard, to appeal to the 30 million customers in the Lands End database. Sears purchased Lands End earlier this year.

Kevin Keleghan, president of credit and financial services at Sears, told the American Banker that this latest move to expand the acceptance of its private label card is a response to customer demand. He estimates that 65-70% of customers in Sears stores carry a Sears card, either the private label card or the MasterCard product. Keleghan said "MasterCard, I believe, is the better value proposition for most Sears customers,"because of its wider acceptance, lower interest rate and a rewards program. But, some customers have expressed interest in making more use of the private label card. Keleghan added "The partners we are lining up will give our customers value." He did name any of the partners, but said the company had signed about a dozen letters of intent with businesses in industries that do not compete with it, including companies in the grocery, pharmacy, restaurant and hotel industries.

One analyst pointed out a potential risk with the strategy. Sears proprietary cardholders who most desire to draw down their Sears credit line at other stores may be the very ones that have tapped out their other credit lines. Thus, the credit risk may be large.